Our markets

Cattle prices and producer incomes

Cattle prices fell in 2006-07 from the record set in 2005-06, because of the rise in the A$, sluggish export demand and the continuation of the drought. Despite this, prices have increased substantially over the past decade, even after adjusting for inflation. This trend has been driven by strong demand for beef in Australia and overseas and disease-related trade restrictions that affected our main competitors. As a result, average beef producer incomes have been historically high in recent years, despite the drought. However, incomes are estimated to have fallen considerably in 2006-07, to $34,910 per farm (ABARE), because of poor seasonal conditions, higher fodder costs and lower saleyard prices.

Domestic beef demand

Estimated Australian consumer expenditure on beef grew by a further $217 million, or 3.4% in 2006-07, to $6.6 billion, bringing the jump since 2000-01 to 53%. This has been associated with strong consumer spending, a lift in the quality of beef, improved presentation, marketing and promotion and more positive nutritional and dietary attitudes to red meat.

Beef exports

The value of beef exports increased 8% in 2006-07, to a record $4.9 billion. Export revenue has risen 131% over the past decade. Almost half of this came from sales to Japan ($2.2 billion). The value of beef exports to Japan and Korea has jumped by 53% and 158%, respectively, since the US BSE outbreak in December 2003.

Lamb producer prices and incomes

Rising lamb supplies has seen the average price of lambs fall by around 7% since the records in 2003-04, but they remain historically high. The buoyant market has been driven by strong growth in demand for lamb in Australia and a host of overseas markets, led by the US and Japan.

While farm cash incomes to specialist prime lamb producers have been historically high, the ongoing drought has seen a significant decline over the past two years to $17,800 per farm (ABARE). Those producers not in drought have been able to maintain incomes, with the top 25% of lamb specialists having an estimated farm income of $87,338 in 2006-07.

Expenditure on lamb

Better lamb quality, improved product presentation, strong promotion, a general lift in the health image of red meats and a strong economy, have all combined to raise Australian consumer interest in lamb. Expenditure on lamb is estimated to have doubled over the past decade, including a further 12% rise in 2006-07, to almost $2 billion in 2006-07.

Lamb exports

The value of lamb exports eased slightly in 2006-07, to $779 million (ABS data), despite volumes rising 4.8% to 150,243 tonnes (DAFF data). Lamb export value has increased by over 200% in the past decade and volume almost 140%. Global demand for Australian lamb remains strong, with tight global supplies lifting the need for lamb in a wide range of markets. The value of Australian exports eased to the major markets of Japan (down 31% to $64 million) and the US (down 1% to $309 million).

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